Skip to main content
Part of complete coverage on

China-Latam economic ties tightening

By Shasta Darlington, CNN
November 19, 2012 -- Updated 0559 GMT (1359 HKT)
Cars made by Chinese company JAC Motors are pictured on display in Rio de Janeiro, Brazil.
Cars made by Chinese company JAC Motors are pictured on display in Rio de Janeiro, Brazil.
STORY HIGHLIGHTS
  • China has increasing economic influence in Latin America
  • China has replaced United States as Brazil, Chile's top trading partner
  • China's appetite for raw materials fueling high growth in commodity-producing countries

Sao Paulo (CNN) -- The rise of China in Latin America, long considered the United States' "backyard," took many by surprise.

Now, its economic influence in the region is only expected to grow.

For the past decade China has fueled high growth in major commodity producing countries like Brazil, Chile, Argentina and Peru with its appetite for raw materials such as iron ore, soybeans and copper.

In fact, China replaced the United States as the top trading partner in Brazil and Chile and is on the way to doing so in many others countries in Latin America.

Read more: China's new leaders

China's growing pains
Chinese workers demand higher pay
Challenges for China's new leaders
Latin America looks for China investment

That relationship made China popular with many countries weary of trying to get their goods onto American and European shelves.

But when global demand for Chinese goods dried up in 2008 and 2009, the relationship with Latin America evolved.

"China figured out that Latin America could be a very good alternative market for its surplus," said Roberto Dumas Damas, a professor at Sao Paulo's INSPER business school.

The flood of cheap exports from China sparked a backlash from many of the hardest-hit industries, but overall, the trade relationship still tips in Latin America's favor.

Brazil's trade surplus with China, for example, was $11.5 billion in 2011.

Read more: Will Chinese consumers rule the world?

China followed up not only with cheap exports of its goods, but hefty investments in Latin America to make it easier to reach the region's growing middle class consumers.

"There were two waves of foreign direct investment," Dumas said. "First to guarantee access to raw materials, like land for soybeans and iron ore plants."

"In the second wave," he added. "Companies want to explore the region's consumer markets."

He pointed to plans by Chinese carmakers Chery and JAC carmakers to build automobiles in South America.

According to China's Ministry of Commerce, Chinese foreign investment in Latin America jumped to $10.5 billion in 2010 from $7.3 billion in 2009.

Latin America's growing reliance on the Chinese economy has made it less likely to criticize politics there. Indeed, many leaders are keen on maintaining the status quo.

A slowdown in China's economy, however, is taking its toll on Latin America.

Analysts say a slump in exports of raw materials like iron ore, for example, will be partially offset by growing demand for soft commodities like soybeans.

But they insist Latin America now needs to focus on investing in its own industries and diversify its economy so that the region won't rely so heavily on China in the future.

ADVERTISEMENT
Part of complete coverage on
December 18, 2014 -- Updated 0857 GMT (1657 HKT)
Chinese students show a handmade red ribbon one day ahead of the the World AIDS Day, at a school in Hanshan, east China's Anhui province on November 30, 2009.
Over 200 Chinese villagers in Sichuan province have signed a petition to banish a HIV-positive eight-year-old boy, state media reported.
December 15, 2014 -- Updated 1144 GMT (1944 HKT)
A Chinese couple allegedly threw hot water on a flight attendant and threatened to blow up the plane, forcing the Nanjing-bound plane to turn back to Bangkok.
December 15, 2014 -- Updated 0503 GMT (1303 HKT)
China's 1.3 billion citizens may soon find it much harder to belt out their national anthem at will.
December 10, 2014 -- Updated 0021 GMT (0821 HKT)
Like Beijing today, Los Angeles in the last century went through its own smog crisis. The city's mayor says LA's experience delivers valuable lessons.
December 6, 2014 -- Updated 0542 GMT (1342 HKT)
At the height of his power, Zhou Yongkang controlled China's police, spy agencies and courts. Now, he's under arrest.
December 5, 2014 -- Updated 0826 GMT (1626 HKT)
China says it will end organ transplants from executed prisoners but tradition means that donors are unlikely to make up the shortfall.
December 5, 2014 -- Updated 0648 GMT (1448 HKT)
China's skylines could look a lot more uniform in the years to come, if a statement by a top Beijing official is to believed.
December 3, 2014 -- Updated 0855 GMT (1655 HKT)
Despite an anti-corruption drive, China's position on an international corruption index has deteriorated in the past 12 months.
November 26, 2014 -- Updated 1201 GMT (2001 HKT)
A daring cross-border raid by one of Russian President Vladimir Putin's associates has -- so far -- yet to sour Sino-Russian relations.
November 24, 2014 -- Updated 0051 GMT (0851 HKT)
A 24-hour Taipei bookstore is a hangout for hipsters as well as bookworms.
November 25, 2014 -- Updated 0153 GMT (0953 HKT)
China is building an island in the South China Sea that could accommodate an airstrip, according to IHS Jane's Defence Weekly.
November 19, 2014 -- Updated 1057 GMT (1857 HKT)
North Korean refugees face a daunting journey to reach asylum in South Korea, with gangs of smugglers the only option.
November 21, 2014 -- Updated 2319 GMT (0719 HKT)
China and "probably one or two other" countries have the capacity to shut down the nation's power grid and other critical infrastructure.
ADVERTISEMENT